There are numerous instances under which businesses are obligated to provide information, and, perhaps, payment, to tax authorities, such as the United States' Internal Revenue Services (“IRS”) and state tax authorities. Knowing which forms are to be filed, when the forms are to be filed, and completing the information for filing are resource intensive tasks. These problems are accentuated for businesses doing business in many tax jurisdictions.
One type of regular obligation for tax reporting relates to a business' payroll. For example, businesses must file annually file with the IRS a Federal Tax Form 940 with Form 940-V, Payment Voucher, for taxes due on wages. Information used to complete the Form 940 and Form 940-V is based on total taxable wages and credits for taxable payroll in the states. In addition, the business is required to file a Federal Tax Form 941 quarterly for taxes due on wages. As another example, in Tennessee, a Tennessee Department of Labor and Workforce Development Report must be filed for each employee having Tennessee income, with such report requiring information about the wages and job skills fees paid for that employee.
In present systems payroll systems, two approaches are generally taken by businesses to complete forms requiring wage-related information. One approach is to manually complete the forms based on reports generated by the payroll processor or the payroll processor system used by the business. In a second approach, the tax forms are automatically generated by a payroll processor systems. These generated forms generally have some similarity to the tax authority's official form, but are produced as a result of custom programming by the vendor of the payroll processor system. The need for the custom programming is driven by the actual system together with the specific print capabilities available to the payroll processor or the business—whichever is the end user as to the creation of tax forms. The use of custom programming makes it difficult to maintain the system due to changes in tax authority requirements and/or changes in printing resources. Also, custom programming requires resources to correct errors or to add additional information to the forms, particularly if that information is separate from the payroll processor system.
Consider, for example, the payroll processor system disclosed in U.S. Pat. No. 6,411,938, Gates et al. In the system of Gates et al., tax forms, such as the Federal Form 941, are printed by the payroll processor and mailed to the employer. At the end of the year, the Federal Tax Form 940 is printed by the payroll processor or are placed on a tape and provided by the payroll processor to the IRS. W-2 forms are printed by the payroll processor and mailed to employees. Also, if information is required by state tax authorities, forms required by such state tax authorities must be manually created from the wage listing data.
The system of Gates et al. has several shortcomings. Certainly, with respect to state wage tax requirements, the need to manually create forms from wage listing data consumes time and human resources. Often, wage data is required by a state tax authority on a more frequent basis than once per year. Thus, the consumption of time and human resources can be very costly for an employer.
With regard to forms created by the payroll processor and printed and mailed to the employer, valuable time is lost in sending the forms to the employer. Because such forms are often accompanied with payment, it is preferred that an employer be able to produce such forms on the last date such forms are to be mailed rather than wait and hope that printouts of the forms reach the employer before such date. Such mailing is also problematic if the forms require input from the business that is not known by the payroll processor or if the forms contain any errors. For example, a tax form may require certain credits that are not known to the payroll processor system, and, hence, the payroll processor. Such credits usually affect calculations made on the form. Thus, the business is required to enter data and also to make calculations manually to complete the form.
Also, the employer does not have control over the completion of its tax forms, because the employer does not have the ability to enter data into the tax form. Further, the employer cannot verify the accuracy of the forms until received, nor can any last minute changes be made in the event of changes in payroll or in credits. Thus, the creation of the form by the payroll processor may be incomplete and/or require that the employer complete the form by hand once delivered to the employer by mail. Such a system also does not allow for last minute updates to the data on the forms. In addition, the printed forms of Gates et al. are under the control of the payroll processor, and likely are programmed for printing on the payroll processor's printers. Because all printing is done by the payroll processor, there is no motivation to make the forms printable on various systems used by the employers who use the system.
Another payroll processor system is disclosed in U.S. Pat. No. 6,401,079, Kahn et al. The system of Kahn et al. is able to produce reports for tax authorities—both federal and state, but appears to create reports that are specific to the system as the system executes stored programs to calculate the taxes. As previously mentioned, a system using custom programming is not desired for it requires skilled resources to deal with any changes in the tax calculations. In addition, the system of Kahn et al. does not appear to give the employer control over creation of its tax forms, or the ability to make last minute changes based on update wage-related information.
It is desired to provide a payroll system and method that more effectively deals with requirements, both forms and payments, to various tax authorities. Such a system should permit the users, i.e., the businesses accessing the system, to be able to control printing of the forms and to print such forms at the user's computer. It is also desired to provide the user with the ability to validate the accuracy of the tax information, to override certain data fields, and to allow the user to enter information required and not known by the payroll processor system. It is further desired for the system and method to print forms interpreted by various types and makes of printers without requiring special or custom programming for such support.